The U.S. health care system is hamstrung by high costs and inefficient care, wasting $750 billion in 2009 alone, but new technology and a better-designed payment system could help turn the system around, according to a report released Sept. 6 by the Institute of Medicine.
America’s disorganized and overly complex health care system is both too slow to adopt simple solutions like consistent provider handwashing, while also moving too quickly to implement costly and unproven new technologies and treatments, the IOM committee wrote.
Dr. Mark D. Smith
The result is that for 31 of the past 40 years, health care costs have increased at a greater rate than the total U.S. economy. Health care costs also now account for about 18% of the country’s gross domestic product, according to the report.
"It would be one thing if we were getting good value for this money, but there is ample evidence, noted in the report, that there is tremendous waste in this system," Dr. Mark D. Smith, chair of the IOM committee and president and CEO of the California HealthCare Foundation in Oakland, said during a press conference to release the report.
The IOM committee estimates that about 30% of U.S. health spending in 2009 – about $750 billion – was spent on unnecessary services, excessive administrative costs, and fraud. And in 2005, 75,000 deaths might have been prevented if all states had delivered the same quality of care as the highest performing state, according to the committee.
Dr. Smith noted several examples of "wasted opportunities in American health care." For instance, less than half of elderly patients are up-to-date on clinical preventive services. These same patients also struggle to coordinate their care, seeing an average of seven physicians across four practices each year. On the hospital side, surgery patients are seen by 27 different providers during an average hospital stay. Still, one in five hospitalized patients is readmitted within 30 days of discharge.
Despite the challenges, Dr. Smith said the affordability of sophisticated computer technology and advances in the science of organizational management offer hope for moving to a system of higher quality care at lower cost.
A crucial first step, however, must be to change the payment incentives so that physicians are not paid for doing more, but instead are paid for better clinical outcomes.
"We need to have a financial environment in which providing high-value care is rewarded by payers and that reward requires that the delivery of high-value care be known to everyone," Dr. Smith said. "That’s why transparency is important, rather than reputation."
The IOM committee recommended that both private and public payers begin to reward improvement and learning through outcome-based and value-oriented payment models. They also said payments should favor team-based care that focuses on patient goals.
Health care organizations and payers also should make available more information on quality and cost, the IOM committee wrote.
Clinical decision support is another key element in improving a health care system that is overwhelmed with data, according to the IOM report. "It’s not good enough for the answer to be in a journal that you might read later on that night when the patient has already gone home," Dr. Smith said, adding that there also needs to be a way to capture clinical data for quality improvement and research purposes.
Other key elements recommended by the IOM committee include getting patients more involved in their care, establishing better communication between inpatient and outpatient physicians, and using management tools from the retail industry to change the "culture" in health care and provide more support for learning and quality improvement.
That cultural shift also includes a move from a "cost agnostic" approach to a "cost aware" approach by clinicians, Dr. Smith said.
The report was sponsored by the Blue Shield of California Foundation, Charina Endowment Fund, and the Robert Wood Johnson Foundation.